North Carolina Home Builders Association Prevails in Cabarrus County APFO Suit

On August 24, the North Carolina Supreme Court issued its long awaited opinion in the Cabarrus County APFO case (Lanvale Properties, LLC  and Cabarrus County Building Industry Association v. County of Cabarrus and City of Locust). The Supreme Court, in a 5-2 decision, affirmed the decisions of the NC Court of Appeals and the trial court which had earlier struck down the APFO.  In support of the argument made by the building industry, the majority opinion concluded that Cabarrus County lacked the authority to impose the APFO.

The Supreme Court rejected each of the county’s arguments raised in an effort to overturn the Court of Appeals decision. The majority opinion, written as correctly anticipated by us, summarily rejected these arguments:

The County urges us to reverse the decisions below for three reasons: (1) The County was authorized to adopt the APFO pursuant to its “general zoning power”; (2) Session Law 2004-39 authorized the County to “adopt and enforce its APFO countywide, including within incorporated areas of the county and without the request or consent of any municipality in the County”; and (3) Plaintiff‟s claims were barred by the applicable statute of limitations. We reject each of these arguments.

The 68-page opinion is available HERE, which contains Justice Jackson’s majority opinion joined by four other justices (Parker, Martin, Newby and Edmonds), and the dissenting opinion authored by Justice Hudson and joined by Justice Timmons-Goodson.

This is a great victory for the real estate industry, and for the North Carolina Home Builders Association (NCHBA) in particular. The NCHBA Legal Action Fund approved funds to file helpful amicus briefs in the Court of Appeals and in the Supreme Court in this case. It did so to preserve the hard-fought victories which the building industry won in the Union County APFO case as well as the earlier victory in the Durham Land Owners case. These earlier victories were threatened because they were unanimous decisions of panels of the NC Court of Appeals which the Supreme Court had declined to hear. Thus, when the Supreme Court granted Cabarrus County’s petition to review this case, it was critical for NCHBA to participate in order to assure that the principles established in the earlier cases were sustained.

Now that the Supreme Court of North Carolina has spoken on this matter, the APFO threat, which was spreading across the state as an alternative to impact fees has been stopped. More importantly, the Supreme Court’s opinion addressed a line of cases urged by the county as precedent for reversing the Court of Appeals which would have greatly expanded a vision of local government authority which could have opened the door for the much broader exercise of local government power on many fronts.

Thanks are due to NCHBA for leading this fight, and to the legal team of Jim Scarbrough, Dan Higgins and Jay Mills for their outstanding work as lead counsel for the plaintiffs.  Jim is a member of the Cabarrus County HBA and has worked tirelessly on this case since it was first brought. Finally, thanks are due to the NAHB Legal Action Committee for their financial assistance to the Cabarrus litigation. It was indeed a team effort.

Cabarrus County has collected more than $6 million in fees over the years, and these will now have to be refunded to the builders who paid them. Stay tuned for more.

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